In ancient times, shopping was an adventure: people had to leave their houses, get in their cars, and explore aisles of physical retail stores, searching for treasures and good deals. Then came ecommerce, which changed the world. People now had the option to shop from their couches and get products delivered directly to their door. As a result, and for a long time, there were two very different worlds that provided very different experiences: physical stores and online shopping. How cool would it be if customers could have a unified shopping experience, whether they shopped from their laptops at home, a smartphone app, or directly at a retail store? That is already the case, and it is called an omnichannel strategy.
What is an Omnichannel Strategy?
At its core, an omnichannel strategy is about providing customers with the same experience, no matter where they shop. The goal is to remove as many barriers as possible between each company’s sales channels (D2C websites, mobile apps, marketplaces, social media, or physical locations). For example, don’t you think it would be messy if a mobile shopping app were showing a product as out of stock, but the product appears as available on the website?
An omnichannel strategy is not just a single action or process, but rather a myriad of components that collectively contribute to creating a cohesive shopping experience. This encourages customers to build a connection with the brand and finds that connection no matter where they shop. For example, if someone who is used to shopping at the store gets rewards on each purchase, they should get the same benefits if they decide to shop online.
With rising customer expectations and the lines between each sales channel beginning to blur (for example, with BOPIS: Buy Online Pickup In-Store), an effective omnichannel strategy became a necessity.
What’s in it for you?
“Alright, that sounds cool; I get it. But it sounds like a lot of work. Why should I focus on omnichannel?” That is a valid question, and there are many reasons why entrepreneurs should focus on this issue.Not only are customers’ expectations increasing, but their behavior is rapidly changing over time. It is now much more common for customers to shop on multiple channels for the same brand.
According to a report by Harvard Business Review, 73% of customers use multiple channels during their shopping journey. As a result, customers expect a seamless shopping experience. If they can’t get it from you, they’ll be frustrated and may consider shopping from competitors. A solid omnichannel strategy is becoming more important for customer retention and, in my opinion, one of the most critical metrics for success.
An efficient omnichannel strategy encourages customers to shop across multiple sales channels. This means more customer engagement, exposure to the brand, and, ultimately, an increased lifetime customer value. For example, a customer who usually shops online might become more tempted to visit a physical store and spend extra money there (a First Insight Report found that 71% of all shoppers surveyed spent $50 or more when shopping in-store compared to only 54% of respondents spending more than $50 when shopping online).
Finally, an omnichannel strategy allows companies to gather more data on their customers, whether from online stores, physical locations, social media, or other channels. Data analytics tools keep getting better and provide valuable insights into customers’ demographic, behavior, and trends. This makes advertising campaigns more efficient due to improved targeting and helps provide customers with a personalized customer experience. Companies can adapt to customers’ preferences in real time and significantly improve customer engagement.
Best Practices when Implementing an Omnichannel Strategy
A survey by PwC revealed that 59% of consumers who experience difficulty with a brand’s channels will avoid using that brand in the future. In an omnichannel strategy, the shopping experience should be flawless on every channel, and consistency is the name of the game. It applies to every part of the shopping experience and most interactions customers have with the brand. Every company will have a different omnichannel strategy, but there are four things that will be common among most plans: consistent inventory, price, customer data, and communication.
A first step could be to ensure there is a unified inventory management system that synchronizes inventory across all sales channels. It prevents overselling, decreases out-of-stock rates, and provides a better shopping experience for customers.
Pricing should also be unified whenever possible. As a customer, I hate buying something online only to find out it is sold for less at retail stores. It can be tempting to do some online-only promotions, but these should be carefully selected and should remain the exception rather than the norm. Customers who miss out on a good deal will be frustrated, and those who waste time shopping across multiple channels to find the lowest prices won’t stick around for very long.
The next important point is unified customer data. Customer data should be stored in one database shared between multiple channels, and the same data should be used for customers’ interactions with the brand. If a customer earns rewards when shopping online, they should also earn the same rewards when shopping in-store. It is, of course, more difficult with social media and marketplaces (it is much more challenging to collect data on these channels you control but don’t own). Collecting data across multiple channels and aggregating all this data into one database also makes data analytics more efficient and facilitates marketing and personalization.
Effective and consistent communication has an important impact on the customers’ perception of a brand. What if you received social media notifications, marketing emails, and targeted ads, and all these three forms of communication had a very different tone and identity? You would be confused: who are you buying from? That is why communications should be as cohesive as possible.
The Main Challenges of Setting up an Omnichannel Strategy
Now we’ve explored the benefits and a few of the best practices of an efficient omnichannel strategy, let’s talk about some of the main challenges companies may face when implementing it.
The first area where implementing an omnichannel strategy can be challenging is the technical part. Setting up information systems and an IT architecture capable of supporting complex and expansive flows of data is often challenging, especially for companies with legacy systems in place. In addition to the initial setup, there might be data privacy concerns from customers. It is important to work with the right experts here. Even though I now work in ecommerce, my master’s degree in information systems engineering is still useful to me these days, beyond decorating my wall. And one very valuable thing I have learned is that design mistakes tend to be the most costly in the long run due to their cascading effects on the entire project. That is why it is crucial to not mess up the information systems design part. Once it is in place, it is essential to properly train the staff who need to interact with the updated IT systems, including customer service (for example, if they need to check if an item is in stock).
The next challenging area is the financial part of the project. Because of the technical complexity, setting up an efficient omnichannel strategy can be very costly, depending on the company size, current design and systems, and how old it is. Financial resource allocation should be done carefully. One of the main strategies companies use is not to integrate everything at once, but to focus on the most strategic sales channels first, then incorporate the rest over time.
Last is a problem that some companies may overlook but is as important, if not more important, than the two points I mentioned above. Despite all the good things it can bring to the customer experience, an omnichannel strategy must not dilute the brand’s value proposition. If you’ve read some of my other articles, you’ll know I see a good value proposition as THE most important thing a company should have. And sometimes, the implementation of an omnichannel approach can conflict with this value proposition.
Let me give you an example. Imagine a company that buys surplus or unsold inventory from manufacturers or resellers and sells them to customers in retail stores at a heavily discounted price. A great deal for customers, who can go treasure hunting in these stores and buy, for example, cheap decorative pillows. That is the company value proposition—get customers to come treasure hunting and find great deals on quality products. Now, it would be tough for this company to address online channels while maintaining the same value proposition. If the company decides to list its items on Amazon (which would be a challenge in itself, as they’d have to create multiple listings, and their inventory heavily varies based on what corporate buyers can find), they could not afford to list their decorative pillows at the same price as in retail stores due to important shipping costs. This would cause large discrepancies between online pricing and in-store pricing.
But why should you care if you only operate online? Let me give you another quick example. If part of your value proposition is an exciting unboxing experience for your customers, you can easily provide that when customers buy from your D2C website. If you sell on Amazon and want to stay true to your value proposition, your options become much more limited for fulfillment. You can’t use Amazon FBA, which will send the items in an Amazon-branded box, and Amazon’s terms of service also limit what you can and can’t include in the packages you send. It makes providing a cohesive shopping experience a lot more difficult, and you’d probably have to make tough choices.
Conclusion
Ultimately, the concept of omnichannel ecommerce aims to remove barriers between a company’s various sales channels to offer customers a consistent and convenient shopping experience. As customer behavior and expectations shift toward using multiple channels, an effective omnichannel strategy has become essential for retaining their loyalty. This approach not only meets customers’ evolving expectations but also represents a source of increased engagement and lifetime value for businesses.
However, challenges like technical complexities, financial prioritization, and potential value proposition conflicts can be difficult to deal with. Yet, a well-executed omnichannel strategy can contribute to long-term growth and customer satisfaction.
